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Perceived institutional distance in the emerging market entry process
Linnaeus University, Faculty of Business, Economics and Design, Linnaeus School of Business and Economics. (Linnaeus Baltic Business Research Center)ORCID iD: 0000-0003-4925-8937
Linnaeus University, Faculty of Business, Economics and Design, Linnaeus School of Business and Economics. (Linnaeus Baltic Business Research Center)
2011 (English)In: International Journal of Business Environment, ISSN 1740-0589, Vol. 4, no 3, 268-286 p.Article in journal (Refereed) Published
Abstract [en]

We claim that difference in business environments is the result of differences between institutions. In this paper, a network perspective is taken on business markets and we set out to examine how differences in institutions are perceived in business relationships between firms originating from disparate business networks. The concept of perceived institutional distance is developed in three sequential stages. First, we conceptually develop the concept as an anchored theoretical construct. Second, we try out the concept empirically. Third, we verify the dimensions in which perceived institutional distance is manifested. The study reports from an on-site survey of 203 SMEs with experience of entering emerging markets. Five dimensions in which perceived institutional distance is manifested are presented: patience and rationality from the cognitive institutional pillar, distrust and reliability from the normative pillar, and sanctions from the regulative pillar.

Place, publisher, year, edition, pages
2011. Vol. 4, no 3, 268-286 p.
Keyword [en]
internationalisation processes; institutional network approach; institutional distance; on-site survey method; managerial perceptions.
National Category
Business Administration
Research subject
Economy, Business administration
Identifiers
URN: urn:nbn:se:lnu:diva-11804DOI: 10.1504/IJBE.2011.041596OAI: oai:DiVA.org:lnu-11804DiVA: diva2:418267
Available from: 2011-05-20 Created: 2011-05-20 Last updated: 2017-02-17Bibliographically approved
In thesis
1. Establishment of Insidership Positions in Institutionally Distant Business Networks
Open this publication in new window or tab >>Establishment of Insidership Positions in Institutionally Distant Business Networks
2011 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

Since the opening of formerly closed markets in Eastern Europe and China in the early 1990s, numerous firms have sought to capture the growth opportunities prevailing in the virgin but institutionally distant business networks in these countries. I claim that the entry process into an institutionally distant business network has been realised when the entering firm has reached an insidership position in the network. To advance this idea, the thesis introduces the overlooked medium-sized multinational exporter (MME) and answers the following overarching research questions: (I) how do MMEs establish insidership positions in institutionally distant business networks, and (II) what critical abilities are developed by MMEs in the process of entering an institutionally distant business network? To answer these questions, qualitative and quantitative methods have sequentially been mixed to first give an in-depth understanding of the empirical field, and second to verify and generalise some of the most central tentative findings. Empirically, the study reports from a case study of eight firms in the Baltic Sea Region and from an on-site survey of 203 Swedish firms with experience of entries in Eastern Europe and/or China. Five individual essays are presented—all designed to reflect different aspects of the institutionally distant network entry process. The findings are condensed in the cover of the thesis, where it is claimed that an insidership position is reached through three main phases: the Scouting phase, the Qualifying phase and the Shielding phase. Furthermore, it is found that that the most critical abilities developed through the institutionally distant network entry process is local experience-based knowledge of high specificity. It is shown that previous experiences, generated in different business networks in mature markets, are not useful in the network entry process in immature markets. As a consequence, there is reason to believe that the entering firm needs to develop unlearning abilities to replace obsolete or misleading experience.

Place, publisher, year, edition, pages
Växjö, Kalmar: Linnaeus University Press, 2011. 116 p.
Series
Linnaeus University Dissertations, 52/2011
Keyword
internationalisation process, entry process, network insidership, emerging markets, institutional distance, business networks, liability of outsidership, liability of foreignness, SME, export
National Category
Business Administration
Research subject
Economy, Business administration
Identifiers
urn:nbn:se:lnu:diva-11799 (URN)978-91-86491-82-6 (ISBN)
Public defence
2011-06-14, Ny 200, Kalmar Nyckel, Gröndalsvägen 19, Kalmar, 10:00 (English)
Opponent
Supervisors
Available from: 2011-06-07 Created: 2011-05-20 Last updated: 2017-02-17Bibliographically approved
2. Internationalization processes of small and medium-sized enterprises: Entering and taking off from emerging markets
Open this publication in new window or tab >>Internationalization processes of small and medium-sized enterprises: Entering and taking off from emerging markets
2012 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

The high economic growth of formerly closed markets such as China, Russia, Poland, and the Baltic states has created vast business and growth opportunities for small and medium-sized enterprises (SMEs). Although this international business expansion of SMEs occurs in highly dissimilar business contexts and fierce international competition, it remains overlooked by research. Therefore, the main aim of this thesis is to contribute to an enhanced understanding of internationalization processes of SMEs by studying the overarching research question: What are the main features of internationalization processes of SMEs in an emerging market context? Three sub-problems are researched with regard to SMEs entering and taking off from emerging markets, as well as differences and similarities between these processes, in order to identify what features characterize them. Empirically, two surveys of 116 and 203 Swedish SMEs, respectively, with experiences of entry into emerging markets were conducted through standardized questionnaires via mail and on-site visits. In addition, case studies were conducted through interviews and observations of five internationalizing Chinese SMEs and four Chinese wholesale and retail market platforms. Five essays are compiled within the thesis and major findings and conclusions provide theoretical and empirical contributions to research on the internationalization processes of SMEs. With regard to the overlooked internationally experienced manufacturing SMEs from mature markets such as Sweden, theoretical advancements are made identifying the main concepts of their entry into emerging markets: entry node (the establishment point into the foreign business network); market-specific experiential knowledge; and perceived institutional distance. With regard to the internationally novel Chinese SMEs, these were seen to diverge from traditional internationalization paths. Indications were found of a parallel expansion abroad and at home, even using foreign markets as a springboard for further growth at home. The take-off node concerns the departure from an emerging home market, where a paradox of knowledge was found: the use of indirect export via a domestic intermediary facilitates the take off, but hinders further international expansion since no international experience or relationships are built up. Moreover, institutional distance was reduced due to collective internationalization through co-locating abroad. Generally, degree of maturity of the home market; as well as degree of internationalization and type of firm; are the main features behind differences between internationalization processes of SMEs in an emerging market context.

Place, publisher, year, edition, pages
Växjö, Kalmar: Linnaeus University Press, 2012. 272 p.
Series
Linnaeus University Dissertations, 78/2012
Keyword
network approach to internationalization, foreign business networks and relationships, internationalization process, foreign market entry, entry/take-off node, experiential knowledge, institutional distance, emerging markets, Sweden, China, small and medium-sized enterprises (SMEs)
National Category
Social Sciences
Research subject
Economy, Business administration; Economy, Marketing
Identifiers
urn:nbn:se:lnu:diva-17726 (URN)978-91-86983-35-2 (ISBN)
Public defence
Ny200, Ekonomihögskolan, Kalmar Nyckel, Kalmar (Swedish)
Opponent
Supervisors
Available from: 2012-02-27 Created: 2012-02-22 Last updated: 2013-11-07Bibliographically approved

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